The Weight-Loss Revolution Is Just Getting Started

Bearish snacks and bullish airlines... A case of missing the big picture... The market for weight-loss drugs... This medicine could save your life... What the mainstream media is still getting wrong...

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Bearish snacks and bullish airlines...

I (Corey McLaughlin) was driving around late last year listening to a financial radio show. The host and a commentator were talking about a suddenly popular subject – weight-loss drugs. Specifically, they were discussing what they thought Mr. Market was implying about two of the consequences of these new-age drugs...

They said shares of Hershey (HSY) – which were down about 30% at the time from a previous high – might be hurting because the drugs would lead more people to eat less chocolate and snacks that the company makes. That sounded like a reasonable risk to consider.

But then the pair said that commercial airlines might benefit from the adoption of weight-loss drugs, evidently citing a Wall Street analyst's report that at least one airline could save $80 million per year in fuel costs if each passenger lost at least 10 pounds.

I chuckled to myself, but they were serious. And what I didn't hear was the most important part of the story...

We knew something they didn't...

First, the skyrocketing price of cocoa, unmentioned in the show, played a large role in the performance of Hershey's shares. Earlier this year, the company laid off 5% of its staff citing historic cocoa prices and inflation.

As I said on the Stansberry Investor Hour in October, the sell-off presented a buying opportunity in a longtime favorite stock of our research team and founder Porter Stansberry.

Second, even in the off chance that every commercial airline passenger wanted to lose 10 pounds, the odds were incredibly slim that every would-be passenger could even get access to these weight-loss drugs.

We knew this because Stansberry Venture Technology editor Dave Lashmet has been researching these drugs for years. He has written extensively about them in his newsletter and here in the Digest.

The big picture...

It has been several months since that radio show... and I haven't heard a similar discussion since.

The bullish case for airlines and the bearish case for snack-makers was a popular thought for a week or so in the financial media, then it went away, per usual. (The host and commentator would have been better off talking about the challenges facing aircraft manufacturer Boeing (BA) and what that might mean for the airline industry.)

To find the big weight-loss-drug winners... you need to look at the supply-and-demand picture.

I first heard Dave talk about the obesity epidemic in the developed world in March 2020, just before the pandemic lockdowns, and he'd been following it for years already. Clearly, it's a problem.

Back then, Dave shared this chart at one of our editors' conferences, showing the percentage of state populations considered obese in the mid-1990s compared with 2016...

What I didn't fully appreciate at the time was just how deeply rooted the epidemic is – and how long it will take to untangle, if at all.

That became clear when I spoke with Dave later that year. (You can find our conversation published here and here.) We talked about how diet and cultural influences going back decades played a major role. As he said...

We can use 1986 as an example... We would have less than 1% morbid obesity and somewhere around 6% to 7% BMI [Body Mass Index] over 30. What we've seen today is what was less than 10% is over 40% and what was less than 1% is more than 6%. So it's basically gotten five times more extreme and has exploded like an epidemic. The costs are extraordinary.

One reason costs are extraordinary is, once people hit 65, everyone has to pay their medical care. More than half of Americans hitting 65 are obese. Obesity among seniors is what everyone has to pay for. What's the cost of obesity? More joint damage, more risk of Type 2 diabetes, Type 2 diabetes drugs, dialysis machines, being driven to your dialysis machine appointment, and cardiovascular effects, and the fact that you have to go into managed care or nursing homes quicker.

It's not just an individual burden. It's an individual burden until you're 64. As soon as you're 65, it's a national health crisis.

It was clear that the "winners" of this health crisis would be the companies providing solutions to the epidemic... drugs that could be the "cure" for obesity. And these drugs were closer than many people realized...

Tracking the story...

In 2020, Dave "gave away" Novo Nordisk (NVO) – maker of weight-loss drug Wegovy – as a free pick to anyone who tuned in to a special presentation to learn about his research. A year later, the company launched Wegovy after getting U.S. Food and Drug Administration approval as a treatment for obesity...

The stock gained more traction and mainstream media attention last summer, when trial data showed Wegovy reduced the risk of heart attacks and strokes by 20%, opening the door for it to be more widely prescribed. Dave covered that here.

But Dave and the Stansberry's Investment Advisory team had been tracking the drug for even longer... They first recommended owning NVO shares in Stansberry's Investment Advisory in December 2019, when the stock traded for less than $60 per share, or $30 split adjusted for today. Shares are up around 370% since, as this story has continued to develop.

In a June 2022 Digest titled "The Beginning of the End of the Obesity Epidemic," Dave wrote a boots-on-the-ground report from an American Diabetes Association ("ADA") conference in New Orleans about another weight-loss drug...

You see, Eli Lilly (LLY) had shared new trial results...

In a trial of 2,500 volunteers, 625 obese patients who took a daily, 10-milligram dose of the drug Tirzepatide lost an average of 44 pounds over 18 months. Dave wrote...

Only about 3% of participants quit the trial for side effects. Most people who quit the study were in the placebo group, leaving because they sensed the "drug" wasn't working for them.

Again, 97% of participants stayed on Tirzepatide, even before they knew the clinical data we just showed to you. It was that obvious to them that this drug was working.

This isn't a case where the drug's safety is a question mark. This large study proved that it's both effective and safe.

The real problem, Dave said, would be keeping up with demand...

And overall, that's a good problem for Eli Lilly...

We learned at ADA that if current trends of the obesity epidemic continue, more than half of adult Americans will be overweight by 2030. More to the point, 25% of American adults will be morbidly obese by 2030.

Given a population of 260 million American adults, that's 65 million people who will need this drug domestically. Add another 100 million extremely overweight people in Europe, Australia, Canada, and Japan by 2030.

In other words, the biggest problem Eli Lilly will have with this drug is in supplying it.

Cha-ching.

This dynamic is similar to Nvidia's (NVDA) AI technology. Companies are desperate to get their hands on it, but there's too much demand and not enough supply. That's a good thing for Nvidia, which keeps raising profit expectations.

These drugs could help hundreds of millions of people...

Here's what most people don't understand: Supply of these weight-loss drugs remains relatively low. Drugmakers can't keep up with growing demand.

Again, this is a good problem to have. And it's a bigger story than people maybe eating less chocolate, or lighter airplanes at some point in the future.

As Dave told me last year...

There are 100 million obese American adults. There's literally no way to serve that many people... so food demand is not dropping any time soon.

In other words, we're still in the early adoption stage... many people who want the drugs still can't get them.

Dave plans to write more about this topic in this Friday's Digest. So stay tuned. But in the meantime...

A misunderstood story...

As I mentioned yesterday, Stansberry Research employee Ken Millstone is sharing a personal story about trying these weight-loss drugs.

Ken says the medicine saved his life. It was well worth the two and a half hours he drove to get it... and the calls he had to make to 10 different pharmacies before he could get a prescription filled... to help him attack the "demon [he] could never slay."

As Ken says, he was finding success in nearly every other area of his life, but he couldn't get over this "constant burden," no matter what he tried.

But Ken thinks his experience could be replicated by millions of Americans. However, this market is still misunderstood... making for one of the biggest investing stories, by far, of the next decade or more.

In this free video, Ken details the struggles he has faced with his health, where he's at now, and what he says the mainstream media and most investors are overlooking about the weight-loss-drug story. As he says...

I'm telling you my deeply personal story because I want you to see how much this matters... to real people...

And because I hope it can help you understand the real stakes here – and real potential – in a way that the parade of snarky trend stories about celebrities and the ladies of the Upper East Side never could.

Tune in and you'll not only hear Ken's story, but you'll also learn more about what Ken says are "the two most important investments on Earth for profiting from this revolution," for free.

You'll also get a chance to access all of Dave's weight-loss-drug research at a steep discount and lean how Dave finds big winners, consistently. (Stansberry Venture Technology subscribers can find all of Dave's research here.)

Dave's research in our elite Stansberry Venture Technology newsletter on a variety of breakthroughs is unmatched in our company or industry. Trust me, we're only scratching the surface here.

Dave was the first Stansberry Research analyst that our founder Porter Stansberry hired back in 1999... and Dave has several of the top stock picks in our Hall of Fame, including his buy recommendation of Nvidia back in 2016 when it traded for less than $50 per share.

Since launching Venture Technology in 2014, Dave has recommended more than 30 stocks that have doubled or more. He's also the reason why Ken discovered the medical breakthrough that he says saved his life. Click here to get the full story now.

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We'll eschew the mailbag today. We're still working on a few replies to good questions that have come in lately and will share them soon... In the meantime, if you have a question you'd like to see answered, as always, send it to feedback@stansberryresearch.com.

All the best,

Corey McLaughlin
Baltimore, Maryland
March 13, 2024